engineering success review magazine subscription

engineering success review magazine subscription

engineering success review magazine subscription  Published this article page no  24 CAPITAL ACCOUNT CONVERTIBILITY (CAC) Why in news? Deputy Governor of Reserve Bank of India (RBI) has recently indicated towards fundamental shifts in the capital account convertibility framework in India resurrecting a debate relating to Capital account liberalization. What does capital account convertibility (CAC) mean?Convertibility refers to the ability to convert domestic currency into foreign currencies and vice versa to make payments for balance of payments transactions.Thus CAC is the ability or freedom to convert domestic currency for capital account transactions.Capital account liberalization is the process of removing impediments to inflows of capital or allowing domestic investors to invest more freely in foreign assets. o A full CAC allows local currency to be exchanged for foreign currency without any restriction on the amount.Regulation of CAC o India has cautiously opened up its capital account since the early 1990s and presently there exists a partial capital account convertibility in India. o Several committees have been established by the RBI in the past to recommend a pathway towards fuller CAC includingCommittee on CAC 1997 (Tarapore Committee 1997) recommended full CAC for 19992000 based on fulfilment of certain benchmarks related to Fiscal Deficit Inflation NonPerforming Asset (NPA) etc.Committee on Fuller CAC 2006 (Tarapore Committee 2006) suggested measures for gradual capital account liberalisation. Steps taken to move towards fuller CACIntroduction of the Fully Accessible Route (FAR) which places no limit on nonresident investment in specified Government securities (GSecs).Allowing trade in nonconvertible forward (NDF) rupee market The RBI permitted banks in India which operate International Financial Services Centre Banking Units (IBUs) to participate in the NDF market. o An NDF is a foreign exchange derivative contract which allows investors to trade in nonconvertible currencies with contract settlement in a convertible currency. NDFs trade principally beyond the borders of the currencys home jurisdiction enabling investors to transact outside the regulatory framework of the home market engineering success review magazine subscription buy.

engineering success review magazine subscription